Broedrene A O Johansn New

Welcome to Brøderne A&O Johansen's Q1 2026 Interim Financial Report. For the first part of this presentation, all participants will be in a listen-only mode, and afterwards, there will be a question-and-answer session. To ask a question, please press 5-star on your telephone keypad. I would now like to hand it over to your speakers, CEO Niels A. Johansen and CFO Per Tolstang. Please go ahead.

Good afternoon and welcome to our first quarter 26 webcast. Let us look at some of the highlights of the first quarter. AO saw the highest first quarter sales ever. We saw a growth of 6.5% in Q1. B2B increased revenues by 4.5% and B2C saw a 16% growth. Excluding VVS Experten, the organic growth was 5.3%. I am particularly satisfied to note that the growth met our expectations despite the tough winter that negatively impacted the months of February. Growth margins improved to 24%. Overall margins increased from 23.9% last year to 24%. The pressure on margins is still fierce, but the B2B business managed to deliver margins not far from the margins we saw in Q1 last year. B2C margins increased 0.8% points to 32%. I'm satisfied with the margin development It is and will be a priority for AO to focus on securing margins and at the same time to grow our project's activities. The number of stores in Sweden is now 10. We have just opened our latest store in Falkenberg, thereby ensuring the full coverage of the west coast of Sweden. The opening marks a doubling of stores from five to 10 in two years. It is our plan to further expand our network of stores in Sweden. AO will acquire JMV Cables. JMV Cables is a Danish supplier of cables for construction and the industrial, as well as the infrastructure market. Yearly revenues amount to approximately 125 million Danish crowns. The acquisition strengthens AO's product assortment primarily within medium-voltage cables, and it will strengthen our positioning within the project segment. The acquisition is subject to approval by the competition authorities. Let us look at the management's observations. The competition remains fierce. Demand remained lower than supply of wholesale capacity in Q1. This causes a somewhat one-sided customer focus on price, especially on project sales. During such times, we observed an increasing tendency for customers in negotiating even smaller orders as normally done for larger projects. Over time, we expect a more balanced demand-supply situation. By then, we expect a less one-sided price focus and an increased customer focus towards solution sales and other add-ons, such as how the customer is served in the best and most efficient and convenient way. Our investments drive up costs of doing business. As we stated in our outlook for 26, our investment in business have increased the cost base. The full-year impact from the new shops in Sweden, the investment in additional competencies within project activities, and our focus on strength and coverage of tooling and fasteners are all investments that will bring future growth. Short-term, though, these investments will increase the cost-of-doing business ratio. Many of the investments in Denmark have the purpose of supporting our everything under one roof concept. I'm happy to note that customers appreciate it, which further increased our store visits in Q1. Geopolitical tensions and uncertainty. AO by 83% of all goods in Europe and the rest in Asia. More than 99% of our sales are within Scandinavia. As we speak, we do not see any signs of geopolitical tensions in our numbers and order backlogs. However, the worrying situation in the Middle East drives up prices levels. A scenario of rising inflation and increasing uncertainty may lead to a lower appetite for investing, which is likely to have an adverse effect on demand and thereby on sales. For the time being, and to the best of our perspective, we do not see this having a material impact on AO in 26. But I do want to stress that the current geopolitical and macroeconomic uncertainty increases uncertainty to current outlooks. Acquisition of JMV cables. We consider the acquisition of JMV cables to be a strategic move that will support our strategic focus on serving the global trend of electrification. There is a vast increasing demand for larger and more specialized cable solutions. JMV will help AO to address this demand. We are acquiring a revenue of 125 million, but more importantly, we are adding competencies from the JMV management and employees to help us address the needs of the large portfolio of AO customers. The technical advisory and project sales will be supported by a cable assortment of blue chip brands as well as own brands. In the recent financial year, JMV cables reported revenues of approximately 125 million and an EBITDA ratio of approximately 7%. Now, Pia, please take us through the financial performance.

Thank you, Niels. Number of sales sales were the same as Q1 last year. Q1 sales came in at index 106.5, organic growth was 5.3% and growth related to VVSX pattern amounted to further 1.2%. As Niels said, highest Q1 ever. Sales for the quarter ended higher than what we anticipated late February when we met last time. Back then, weather conditions had been challenging for some weeks and activity was soft. A strong March compensated and brought the quarter back to what we originally expected. Combined, margins improved from 23.9% to 24%. B2B margins came in 0.2% below Q1 last year. We are satisfied with the relatively low slippage. B2C margins came in at strong 32%, which is 0.8% higher than last year. Cost of doing business ratio increased from 17.6% to 17.8%. In addition to normal cost inflation, the quarter includes 6 million costs related to the impact from investments in growth initiatives. EBDA came in at 99 million, 6% higher than Q1 last year. The EBDA margin was 6.3% equivalent to Q1 last year. Financials were lower than last year due to exchange rate gains, and EBIT ended at 54 million, 7.6% higher than last year. Overall, earnings were as expected. Let's turn to the margins. The B2B margin shortfall of 0.2%, was due to the continued pressure from the project market. B2C's share of sales ended at 18% in Q1, and the margin increased 0.8%. Consequently, margins ended at 24%, thus slightly up compared to Q1 last year. Let's leave the margins and turn to the segment info. The B2B segment accounted for 82% of the Q1 revenues and the B2C segment accounted for 18%. B2B revenues grew 4.5% and margins reduced 0.2% in Q1. Cost increased 6% and consequently the EBDA margin in the B2B segment amounted to 10.9%. compared to 11.3% last year. B2C revenues increased 16%. Organically, B2C grew 9.2%, while 6.9% came from VVS Expertin. B2C margins increased by 0.8 percentage points and ended at 32%. The B2C EBDA margin increased to 9.4% from 8.6% last year. Finally, indirect non-allocated cost increased 3% and amounted to 4.4% of revenues, which was at power last year. Let's turn to the investments. The highlighted band shows the normal level of maintenance investments in AO estimated to be 60 to 100 million on a yearly basis. The investments in Q1 2026 amounted to 68.5 million up from 27.7 million last year. Tangible assets included 12.5 million from establishing new warehouse capacity Intangible assets included 25 millions in acquiring the VVS Experts webshop and the remainder intangible investments of 17 millions were mainly related to investments in IT and digitalization. Full year investments ex-M&A is estimated to be slightly lower than last year. Traditionally, Q1 is a cash negative quarter due to dividends payout and increased cash tied up in working capital. Q1 this year had a significantly higher sales in March than last year and consequently a 10% higher amount of cash tied up in receivables. Due to the risk of price increases, AU has also chosen to add inventories where relevant. Dividend payout in Q1 amounted to 86 million compared to 66 million last year. Interest bearing debt over EBITDA was 2.9 compared to 3.4 times EBITDA end of Q1 last year. Finally, let's turn to the guidance for 2026, which is unchanged. The guidance does not include JMV cables. We expect sales to increase by 5-8%. Our assumptions behind are a market growth of approximately 1-3%, 1% from VVSX pattern and the remaining 3-4% from EU utilizing our momentum and wind market share. We expect an EBITDA in the range of 460-500 million up from 434 million in 2025 and we expect an EBT in the range of 260-300 million up from 260 million in 2025. Earnings are impacted from the following. On top of salary and cost inflation, AO estimate additional cost of approximately 25 million related to full year impact from activities in 2025 and scaling up new investments in 2026. EBT is expected to be negatively impacted by 25 million in additional depreciations in 2026 compared to 2025. And as Niels said, we are following the macroeconomic and geopolitical situation closely. We don't see the uncertainty reflected in current numbers, neither in Q1 nor in the order pipelines. The most significant risks towards our guidance are that the margin pressure will increase instead of gradually reduce during 2026 and that the geopolitical and macroeconomic tension result in lower consumer investment appetite and market activity being more volatile than normal. So, this concludes the presentation and we are ready to take your questions.